Over the past three years, the Open RAN movement has transformed into an operator’s mission to realize a more open architecture in its networks into what sounds more and more like a vendor war on the “legacy vendors”, Ericsson, Nokia, and Huawei. Much of this dynamic has been due to the divisive geopolitics between China and the US. The resultant elimination of low-cost, high-quality RAN system provided by Chinese ICT vendors drew interest in Open RAN as a possible economical option versus the two remaining incumbents that Dave Mayo of Dish Network dubbed “the Scandinavian mafia”.
Over the last couple of months, it seems that Ericsson pulled off what may be firsts in a series of gangster moves that could very well neutralize the Open RAN threat. If played well, these moves could set up a bold counter to an impending UTB (Under-The-Bottom) disruption being pushed by hyperscalers, IT ISVs, and a bevy of system integrators who are upping their game to take on the emerging opportunities at the edge of the network and the edge cloud. Ericsson’s countermoves couldn’t come at a better time as Microsoft, Google Cloud, and AWS have made intrepid forays into the RAN with AWS most recently announcing their private 5G offering.
If you can’t beat them, join them
On November 16, 2021, Ericsson has made a very important announcement that has huge implications on its position in what many hypothesize will be an inevitable Open RAN future and its future as an ICT vendor. Ericsson announced its Intelligent Automation Platform which is a service management and orchestration (SMO) implementation based on a O-RAN-compliant non-real-time RAN Intelligent Controller (RIC) that leverages a range of Ericsson, customer, and third-party rApps to foster integrated management and orchestration across Open and purpose-built RANs. Ericsson calls this a multi-technology SMO solution. This eventuality was something that I mentioned in my interview with 5G America’s president, Chris Pearson earlier this year.
One of the things that puts Ericsson, and the other legacy vendors, at an advantage over most Open RAN pure plays is their managed services arm. These are brown field test bed and production environments where Ericsson can incubate innovations in their application of their Intelligent Automation Platform across a massive portfolio of their proprietary and Open RAN stacks. They can also drive adoption of their Intelligent Automation Platform and developer SDKs across their formidable roster of brownfield clients across the globe.
From a technology portfolio perspective, Ericsson proprietary deployments new and old, will be able to play nicely with any emerging Open RAN implementations. This leveraging of O-RAN for interoperability and the RIC-based Intelligent Automation Platform as an integration bus effectively dispels many if not all of the Open RAN community’s arguments that Ericsson’s equipment will be black boxes with no ability to talk to anything other than Ericsson boxes.
The bottom line, Ericsson has figured out a way to interoperate as needed for maximum “integrateability” if that is even a word. That’s a really big deal putting Huawei under pressure to reconsider their stance on Open RAN, and nudging Nokia to up their own Open RAN game.
The second announcement was Ericsson’s intent to acquire Vonage for 6.2 billion USD in cash. The news was met with a good amount of head-scratching regarding strategic alignment and price tag.
There has also been an inordinate focus on the APIs (Application Programming Interface) business of Vonage and other CPaaS players. There seems to be a broad misconception that CPaaS companies are in the business of selling APIs. In reality, the core value of Vonage’s business is providing enterprises with a global portfolio of brokered communications service through a direct carrier network much like its peer, Twilio.
In this capacity, Vonage has partnered with over 1,600 carriers in 193 countries to provide their aggregated services to their end customers. This enables Vonage to realize a global service delivery capability for voice, video, and messaging services that a carrier cannot provide on its own.
In this regard, Ericsson’s acquisition of Vonage doesn’t present a conflict with its traditional customer, the operator, as some have suggested. Rather Vonage provides a UTB service of virtual network aggregation that delivers end users with what appears to be a global communications service to the benefit of all carrier partners, Ericsson’s traditional customers.
We have seen this type of business model play on the IoT front with Nokia’s WING (Worldwide IoT Network Grid), Eseye’s AnyNet+ SIM, and Twilio’s global IoT network. The value proposition for operators is new revenue opportunities that they would not otherwise have given the aggregated and global nature of these cross-carrier services.
Aside from Vonage’s omni-channel (integrated SMS and voice) CRM SaaS and UCaaS application offerings, Vonage has packaged its aggregated/brokered communication services into a suite of unified communications applications as well as granular communications (voice, video, and SMS messaging) functions or microservices that can be accessed via a library of APIs that the company publishes and makes available to developers to incorporate Vonage services into their applications.
An API is just a matter of,… well, interfacing with a service. It’s not the thing of value.
Clutch Under-The-Bottom (UTB) Defensive Plays
With these two plays, Ericsson remains solidly relevant and maybe even pioneering.
Ericsson’s claim that Vonage will front their 5G push into the enterprise has been met with skepticism. That being said, novel video communications services and features based on volumetric media could be very interesting frontier opportunities for Ericsson to leverage its 5G chops in bringing about new collaboration and communications experiences for its enterprise customers beyond the typical video conference call. Time will tell if Ericsson creates any 5G magic with the Vonage assets it acquires next year.
If anything, the acquisition of Vonage places Ericsson squarely in competition with the hyperscalers and UTB players the likes of Twilio who are pushing to cement their place in the enterprise game at the cusp of communications and CRM (and other business applications). This acquisition could be a great complement to Ericsson’s acquiring of Cradlepoint in November of 2020 which provides them with a presence in the enterprise and SMB markets for networking. These two businesses could provide Ericsson with a nice portfolio to build their enterprise presence and business. A bold move, but likely a necessary move for future growth and competitiveness.
Regarding Ericsson’s new Intelligent Automation Platform offering, it is the game-winning player-hater silencer from three-point range at the buzzer. Ericsson, Nokia, and Huawei are not going anywhere. They are the brownfield of today and the foreseeable future. They continue to be the majority of 5G network upgrades and expansions among Tier 1 operators and beyond. Ericsson has bought itself time from any technological displacement or disruption while playing to the core agenda of the operator CTO which is modernize and integrate. This should be a wakeup call for the Open RAN community to rethink strategy and messaging.
Ericsson is playing to stay in the game, and they are ballin.